The textile industry has urged the government to reconsider the decision to reduce the duty drawback rate saying it would badly affect the garment sector in neighbouring hosiery town of Tirupur. Tirupur Exporters Association president Raja M Shanmugham said the reduction in drawback rate to knitwear export sector from 7.6 to two per cent would adversely affect the Tirupur export garment sector. It has come as a rude shock to exporters, who are already facing severe competition in the global market, he said and appealed to the government to have a re-look at the issue.
If buyers look to go out of the country due to higher prices it would be very difficult to bring them back, since they would stick to competitor countries like Bangladesh, Sri Lanka, Cambodia and Vietnam, he said. He also expressed apprehension that this may lead to more job losses, since 80 per cent of the garment units fell under the MSME category.
Meanwhile, Southern India Mills Association Chairman P Nataraj in a statement, appealed to the Finance Ministry to have a re-look at the rates applicable for textiles. Also, he said the Ministry should take steps to refund all the blocked, embedded taxes, levies and accumulated input tax credit on fabric especially, processed fabric and announce a positive package. He further said this move was not in tune with the earlier announcement of the government about boosting exports and job creation.